When news broke this week that Roelof Botha slipped in the top job at Sequoia Capital, it came with the understated inevitability that has become a hallmark of what is considered by many to be Silicon Valley’s premier venture capital firm.
That the 48-year-old South African, who was already head of Sequoia’s US and European funds, had also assumed global leadership came as no surprise to anyone. The formal decision between the partners was made within 30 minutes, said Doug Leone, the outgoing director.
But there was still plenty to chew on for Silicon Valley Kremlinologists. Botha was made Sequoia’s “senior steward,” doing away with the title of “global managing partner” that always came with the job.
Leone brushed off this change as a simple “cleanup,” but another insider confirmed that it’s a sign that Sequoia has been adjusting to a new global balance of power behind the scenes. Today, the people who manage Sequoia’s newer funds in other regions are on an equal footing — particularly in China, where local head Neil Shen has made Sequoia the country’s leading venture investor and earned him recognition as the firm’s only other “steward.”
Botha will be specifically responsible for global operations such as finance and compliance. Aside from a loose agreement for the new head to set “the general tone” for the company, however, Silicon Valley isn’t in charge.
Like the company he heads, Botha exudes an aura of reserved competence. At a time when Twitter has become a place for star venture investors to flaunt their expertise and settle scores, it comes across with the kind of old-fashioned honesty you might once expect from a corporate banker had.
As the grandson of Roelof “Pik” Botha, the last foreign minister under South Africa’s apartheid regime and later a member of Nelson Mandela’s first government, Botha says he always “felt a burden of expectation to live up to his name.” After receiving the best grades in his province for his high school diploma, Botha said he heard people speculate that the results were rigged.
The sting is still there. “I’m driven to prove I can do it on my own, and I’ve never had to live in anyone else’s shadow,” he said.
Talk to people who know him and they will likely mention his humility. He has a restrained giggle that he uses to deflect too much personal attention. But it masks stiff competition.
Unprompted, he brings up that he finished first in his university class in South Africa “with the highest marks in history”, becoming “the youngest actuary in the history of the country” setting a record in his early career and coming out on top in his class from Stanford University’s Graduate School of Business. “I’m pretty sure my grandfather didn’t affect my grades as the top of my class.”
Botha decided on a route out of South Africa after high school, fearing that the end of apartheid would lead to political chaos, perhaps even civil war. Becoming an actuary, with a UK recognized qualification, looked like an insurance plan.
In fact, he spent two years at McKinsey before moving to California to study at Stanford without ever looking back. Elon Musk pursued him to join PayPal, and he signed on as head of corporate development in 2000 before rising to chief financial officer a year later. A year later PayPal was sold to eBay and a short time later Botha came to Sequoia.
Entrepreneurs who have worked with Botha cite his strong financial and strategic acumen as valuable capital for young companies that often lack both. Sarah Friar, a former chief financial officer at financial firm Square, points to his “intellectual horsepower.” Phil Libin, a former CEO of Evernote, praises his “pattern recognition” experience, which he has gained through years studying various companies
Behind the scenes, Botha is obviously not averse to exerting direct influence. He claims he was influential in getting Square, which was recently renamed Block, to get into consumer finance. Its cash app now claims 44 million users.
He’s also willing to push founders aside when the situation calls for it to make room for more professional management — a difficult balancing act in Silicon Valley, where VC firms compete to be seen as the most founder-friendly.
“When something like this happens, it’s done with consent and consent, in the best interest of the company,” he insists. “This is not a coup.”
Some of Botha’s most notable investments came early, although the returns weren’t as spectacular as they could have been. These included YouTube, which was sold to Google for $1.65 billion, and Instagram, which was bought by Facebook for $715 million.
Along with PayPal, which eBay bought for $1.5 billion, Botha says those deals were a “painful lesson” for selling off too soon. He adds, “I would say in hindsight that all three would have been better off as independent companies.”
It’s no surprise, then, that Sequoia these days sometimes sits atop the stocks of companies it’s supported well after they went public (it puts its public stock holdings at $45 billion late last year). Botha was most recently also the brains behind a plan to create a year a more permanent structure to house capital for the company, eliminating the need to sell when its funds run out.
Such adjustments could indicate that Sequoia is on the verge of profound change, especially as the flood of funds spilling over Silicon Valley and the incursion of outsiders like SoftBank and Tiger Global have brought new competition to the VC industry.
However, Botha suggests that Sequoia will stick with the more gradual development it has seen through previous tech and financial cycles.
He quickly dismisses any suggestion that the company would consider an IPO, as other private equity firms have done. “As far as possible and within the legal limits, we have structured ourselves in such a way that we are a long-term partnership,” he says.
He also dismisses the idea of Sequoia morphing into a different kind of financial institution — perhaps one that can compete with Wall Street’s investment banks — as it seeks a more permanent role in the lives of the companies it helps create was. Instead, he firmly anchors it in the start-up world that gave birth to it — even if it hopes to remain close to the entrepreneurs it supports for much longer.
This story has been altered to clarify the decision-making role of Sequoia’s US arm
https://www.ft.com/content/8dc9ca3c-4b7c-4c75-b89d-f78c6df00f4a Roelof Botha: Sequoia’s choice of leader shows a shift in the balance of power